Home prices to rise after Rera
The residential realty prices are expected to inch higher in coming months, as the implementation of the Real Estate Regulatory Act (Rera), 2016 is likely to alter the demand supply scenario in the realty market.
Since the penalty for any delay in project completion are high under the new rules, real estate consultants believe that that the supply of new units would slow down as the developers will only launch those projects which they are confident of completing with in the promised time-frame.
However, the end-user demand is expected to remain steady and rise further on improved confidence and fall in interest rates. “Rera will play a fundamental role in determining the economic framework of demand and supply in the real estate industry. Supply will reduce because developers will now launch only those projects, which they are likely to complete within the promised time-frame,” said Ramesh Nair, CEO and country head, JLL India.
According to him, there will be more end-users in the market, as consumers confidence in developers is a critical component of market sentiment and they are the primary beneficiaries of greater transparency. “These end users will largely hail from the middle-income and low-income categories that will look closely at affordable housing. With the government’s incentives for affordable housing and the easy availability of home loans, we expect end-user driven demand to pick up,” he said.
JLL believes that the holding cost for developers would also rise which is likely to be passed on to the end consumer. “New projects cannot be launched before all approvals are in place. The window of price escalation between ‘prelaunch’ and ‘official launch’, which was earlier available to developers, is now shut. This additional holding cost will potentially be passed on to buyers, adding to their overall cost of purchase,” added Mr Nair.
CONSULTANTS believe that that the supply of new units would slow down as the developers will only launch those projects which they are confident of completing with in the promised time-frame
JLL BELIEVES that the holding cost for developers would also rise which is likely to be passed on to the end consumer